Tea development account, coffee development account and rubber development account
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 48(1) of Income Tax Act 2025
48(1) Where an assessee is carrying on business of growing and manufacturing tea or coffee or rubber in India, such assessee shall be allowed a deduction on the basis of deposits into the tea development account, coffee development account or rubber development account or any other designated account and computed as per the provisions of the Schedule IX.
Section 48(2) of Income Tax Act 2025
48(2) Any amount withdrawn or utilised or released at the time of closure or otherwise shall be charged to tax in the year in which the amount is transferred or withdrawn as per the provisions of the Schedule IX.
Section 48(3) of Income Tax Act 2025
48(3) Where any asset acquired as per the scheme or the deposit scheme is sold or otherwise transferred in any tax year by the assessee to any person at any time before the expiry of eight years from the end of the tax year in which it was acquired, such part of the cost of such asset as is relatable to the deduction allowed under sub-section (1) shall be deemed to be the profits and gains of business or profession of the tax year in which the asset is sold or otherwise transferred and shall accordingly be chargeable to income-tax as the income of that tax year.
FAQs Section 48 of Income Tax Act 2025
1. What is the Tea/Coffee/Rubber Development Account under the Income Tax Act, 2025?
These are designated accounts into which businesses engaged in growing and manufacturing tea, coffee, or rubber in India can deposit funds and claim tax deductions under Section 48(1), subject to the conditions of Schedule IX.
2. Who is eligible to claim a deduction under Section 48(1)?
Only assessees carrying on the business of growing and manufacturing tea, coffee, or rubber in India are eligible.
3. Is it mandatory to deposit into the development account to claim deduction?
Yes. The deduction under Section 48(1) is allowed only if deposits are made into the specified development accounts.
4. What is the purpose of these development accounts?
These accounts are meant to encourage reinvestment and development in the tea, coffee, and rubber sectors by allowing deferred taxation on profits when reinvested in specified assets or schemes.
5. How is the amount of deduction under Section 48(1) determined?
The deduction is computed based on deposits made into the development accounts and in accordance with the provisions of Schedule IX of the Act.
6. Is there a maximum limit on the deduction allowed?
Yes, the deduction limits and qualifying conditions are prescribed in Schedule IX.
7. Can deduction be claimed for amounts deposited in any account?
No, only deposits into designated development accounts (tea, coffee, rubber, or others notified) are eligible for deduction.
8. What happens when the deposited amount is withdrawn?
As per Section 48(2), the withdrawn or released amount shall be charged to tax in the year of withdrawal, transfer, or closure of the account, as per Schedule IX.
9. Are partial withdrawals also taxable?
Yes. Any withdrawal, partial or full, is taxable in the year it is made.
10. Is tax applicable even if the amount is used for business purposes?
Yes. Once the amount is withdrawn or released, it is taxable, regardless of how it is subsequently used.
11. What if an asset acquired using funds from the development account is sold?
As per Section 48(3), if the asset is sold or transferred within 8 years of acquisition, the portion of the asset’s cost relating to the earlier deduction shall be treated as business income in the year of sale.
12. Does this apply even if the sale is involuntary (e.g., compulsory acquisition)?
Yes. Any transfer, whether voluntary or involuntary, triggers this provision if done within 8 years.
13. What if the asset is transferred after 8 years?
Then Section 48(3) does not apply; no reversal of deduction is required.
14. Can a business maintain more than one development account?
Yes, provided each account is separately maintained and corresponds to the respective activity (tea, coffee, rubber).
15. Can the scheme be misused for deferral of tax?
No. The Act has anti-abuse provisions under Sections 48(2) and 48(3) to tax withdrawals and premature asset transfers.
16. Are these provisions applicable to all taxpayers?
Only those who are engaged in both growing and manufacturing of tea, coffee, or rubber in India can avail the benefit.
17. Are there any reporting requirements?
Yes. Deposits and withdrawals must be disclosed in the return of income and appropriate documentary evidence must be maintained.
18. Can a non-resident claim this deduction?
Only if they are carrying on the specified business in India, and meet all the prescribed conditions.
19. What if the asset is transferred to a related party?
Transfer to any person, including related parties, is covered under Section 48(3) if done within 8 years.
20. Is Schedule IX already notified?
It is expected to be notified before 1st April, 2026, detailing computation methods, account specifications, conditions, and time limits.
The provisions under Section 48 of the Income Tax Act, 2025, along with the rules in Schedule IX, aim to promote sustainable reinvestment in the tea, coffee, and rubber industries in India. By allowing deductions for deposits made into designated development accounts and regulating the taxation of withdrawals and transfers, the Act ensures both flexibility and accountability for businesses availing this benefit.
However, assessees must exercise due diligence in understanding the conditions attached—especially those related to timely utilization of funds, asset transfers, and reporting obligations—to avoid unintended tax liabilities. With effect from 1st April, 2026, these provisions present an opportunity for eligible businesses to plan their capital expenditures and tax strategies more effectively.
For detailed applicability and compliance requirements, businesses are advised to refer to Schedule IX and consult with tax professionals.
